Housing surplus and lower prices from a low immigration percentage

House buyers and brokers torment on the prediction of the mortgage interest and whether the Federal Reserve will lower the interest rates. But the larger story does not make any heads: population growth ends in the United States, which means that there is not much need for more housing.

The demand and supply of housing are of crucial importance, so national trends seem less important. But the population growth of a metropolitan area is simply the national growth rate plus or minus a local variation. With national population growth about zero, even fast -growing regions will see fewer people withdraw.

Last year’s population growth came to around a percent or about 3.3 million people. (The data is estimated on July 1 of each year, so the last figures are now one year old.) But the majority of the increase in the immigration network of outmigration came. The natural increase in the US – the surplus of births on dead – was only half a million people. The other 2.8 million people have moved here from other countries.

Immigration started to fall in the months prior to President Trump’s second elections. Now we have deportations and probably an increase in voluntary movements out of the country. If net immigration is currently zero, our population growth is about 15 hundredth of one percent or about half a million people. We live on average with around 2.6 people per occupied residential unit, so that half a million population increase implies a need for around 200,000 new homes. We have built around 1.4 million units in the last 12 months.

This perspective at the highest level underestimates the need for new homes, but only with a bit. Some places shrink in the population, while elsewhere people from other parts of America move. Abandoned farms in Vermont do not help Miami and Houston in their growth. The addition of only the growing provinces implies another 50,000 homes that are needed than what the total population growth would dictate.

Second houses are approximately two percent of the total housing stock, around 3.5 million units. With rising incomes we could expect more, but we have seen the number of decreases. The drop has probably been in expired “Meerhuizen”, while new second houses are being built in resort areas. Yet the number of new second houses that will be built is probably small compared to the entire housing market.

Some of our existing housing stock will be demolished or destroyed by fire or other disasters. We have no hard information about this, but 100,000 units per year is a ball park estimate based on previous home inventories compared to new construction and manufactured houses.

We also have smaller categories of housing, including university dormitories, pension homes, liveaboard boats, etc. Yet it is difficult to claim that with zero immigration we need to build more than half a million new residential units.

However, there are certainly arguments for more construction. Firstly, housing in many areas is expensive due to restrictions in the field of development. The northeast and west coast have laws that limit construction and push prices above the free market levels.

We also have some people who live with roommates who prefer to live alone. More importantly, many young families like to have more space, but cannot afford to move from apartments or from a small house to a larger house.

Because the demand and supply of housing is so locally, this national image of the housing market can only serve as a starting point for people who are considering buying or building new homes. But the demographic trend and immigration policy are very strong factors. The birth and death rates are very accurate and the immigration attitude of President Trump will probably not change during his term of office.

In recent years, the country – and built – had to have more than a million new residential units per year. That pace will not be normal in the coming years. If we continue to build, search for house prices to soften and the rental prices for apartments. With lower prices we occupy the new residential units and live on average with fewer people per household.